Sales tax fairness

This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Time was, perhaps, that commerce over the Internet was a tender reed that needed to be nurtured and protected from the winds of both the marketplace and government. One of the things it may have needed to be protected from, once upon a time, was the burden of calculating, collecting and remitting sales taxes from customers spread out over thousands of jurisdictions.

That was then. This is now. Now is the time for Congress to approve The Marketplace Fairness Act, and help Utah and many other states start collecting the taxes that they have been rightly owed for many years.

Credible studies put the amount of money lost by states and municipalities across the country at anywhere from $11 billion to $23 billion a year because online merchants aren't required to collect sales taxes from customers in other states.

Utah's estimated loss is about $180 million. Which is why Gov. Gary Herbert supports the bill, and why Sens. Orrin Hatch and Mike Lee are wrong to be standing in its way.

It's not that customers haven't always been legally obligated to pay the tax to their own state and city. They are. It's just that, according to a 1992 U.S. Supreme Court ruling, the online retailer isn't obligated to collect or remit it.

That was more than two decades ago, or, in computer technology years, about the time Earth was still a molten lump of lava. Today, the argument that collecting the taxes that customers legally owe is either an unfair demand or a technological impossibility just doesn't hold any electrons.

Especially when the act exempts businesses with less than $1 million in annual sales and mandates that the states that want their tax remittances must provide help with necessary software and a single place for those funds to be deposited.

When Internet commerce was new, sheltering it from the burden of sales taxes may have made some sense. Now, as online giants such as Amazon and Overstock bestride the land, the exemption has become an unfair advantage for online merchants over those with real stores in real towns.

It can be hard to find a brick-and-mortar retailer who hasn't suffered the indignity of seeing someone walk into their store, thumb through a book, try on a coat, push the buttons on an HDTV, only to watch that customer head out the door to buy the very same item online because, purchased that way, it evades sale taxes.

Online retailers have other advantages to offer  larger selections, door-to-door delivery and, often, lower prices, even if they do collect sales taxes  so they are hardly at any real competitive disadvantage if they collect sales taxes.